Welcome Remuneration Remuneration is the total compensation that

Welcome

Remuneration • Remuneration is the total compensation that an employee receives in exchange for the services he/she performed for the employer. Typically, this consists of monetary rewards, also referred to as wage or salary.

Theories Of Remuneration • Agency theory • Motivation Theory • Psychological Contract Theory

Agency theory • In this theory one party (the principal) hires another (the agent) who possesses specialised skills and knowledge. • The proponents of this theory assumes that each party acts in its own self-interest, this give rise to one of the problems of agency theory as the interest of these two parties may not coincide in some cases.

Motivation Theory • Expectancy theory: refers to the employee’s perception that a certain level of effort will lead to a certain level of performance. • Instrumentality theory: is based on the fact that the level of performance achieved will in turn leads to required outcomes. i. e. reward. • Goal theory: The theory places particular emphasis on goal setting behaviour and stipulates that the goals needs to be clear, specific and achievable if they are to motivated. • Equity theory: posits that employee in organisations expects to be rewarded like other employees for similar levels of input, this makes the distribution of reward important.

Psychological Contract Theory • The transactional relationship: is based on a clear statement of the expectations of both parties to the employment relationship, the exact requirement may be specified in a written contract with a finite end. A fixed term temporary employment contract to provide specific service is an example of the transactional relationship. • The relational relationship: is based on a long term relationship between the employer and the employee and the organisations requirements of the employee are more open-ended and continually negotiated.

T k n a h u o Y Presented By S. Subburaj